2024 (8) TMI 750 - AT - Income Tax

Addition of cash deposits u/s 68 - HELD THAT - As from the perusal of records and Bank statements, it appears that this needs verification as the complete set of Bank statement were not before the AO as well as before the CIT(A). Hence, this issue needs to be verified. LTCG u/s 50C - HELD THAT - Deed of sale of land is produced before the Tribunal at the time of hearing and the same also needs to be verified whether the land sold was in the nature of agricultural land or not has to be taken into account in the context of the specific provisions of Income Tax Statute. This issue also needs verification. Addition made u/s 56(2)(vii)(b)(ii) towards purchase of immovable property also needs verification - As all the issues placed before us are remanded back to the file of the AO for proper adjudication of the issue and verification, after taking cognisance of the evidences filed by the assessee during the assessment proceedings as well as appellate proceeding before the CIT(A) and before the Tribunal. AO is directed to decide the issues as per Income Tax Statute.

Summary

Issues:
- Unexplained cash deposits
- Long Term Capital Gain under Section 50C
- Under-valuation of property purchased

Analysis:

The appeal was filed against the CIT(A)'s order for the Assessment Year 2015-16. The assessee raised three grounds of appeal. Firstly, challenging the addition of Rs. 3,60,400 as unexplained cash deposits, secondly, disputing the addition of Rs. 16,12,245 as Long Term Capital Gain under Section 50C, and lastly, objecting to the addition of Rs. 3,36,435 due to alleged undervaluation of a property purchased. The Assessing Officer observed discrepancies in the cash flow and made the aforementioned additions. The CIT(A) dismissed the appeal, prompting the assessee to appeal further.

Regarding the first ground, the assessee argued that being an Agriculturist, maintaining daily cash balance records was not feasible. The AR contended that the cash deposit was from personal savings and should not be treated as unexplained. For the second ground, the AR claimed that the land sold was agricultural, not attracting Section 50C, and provided additional evidence ignored by the authorities. The AR also highlighted the oversight of the Assessing Officer regarding the nature of the land sold. Lastly, for the third ground, the AR disputed the addition under Section 56(2)(vii)(b)(ii) and criticized the lack of independent findings by the CIT(A).

The DR supported the previous orders and emphasized the assessee's delay in submitting crucial documents despite multiple opportunities. The Tribunal noted the need for verification on all three grounds. The issues of cash deposits, nature of the land sold, and the property purchase valuation were remanded to the Assessing Officer for proper adjudication, considering all evidence submitted. The Tribunal directed the Assessing Officer to decide these issues in accordance with the Income Tax Statute, ensuring the principles of natural justice were followed. The appeal was partly allowed for statistical purposes.

In conclusion, the Tribunal remanded the issues back to the Assessing Officer for thorough verification and proper adjudication, considering all evidence submitted by the assessee. The decision highlighted the importance of following the Income Tax Statute and principles of natural justice in resolving the disputed matters.